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Anyone familiar with fair market value in production only contracts ?

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  • Anyone familiar with fair market value in production only contracts ?

    I'm in a re-negotiation year. I came into a situation where our group is paid out in the 80% percentile for wRVU with a contract that is 100% production based.

    Traditionally my partners production was in 30% nationally, so their overall salary equates to about the 50th percentile.

    I've been doing 90th percentile production so I've had a good year to date (first year they took a cut, now I'm partner and keep a 100 percent).

    The hospital is saying that now my FMV falls outside what is acceptable and they're making proposals to cut my salary in different ways (about 30-40% drop in total income) to the median plus 10% given that I live in a rural area.

    I was told by an outside admin friend that individual production shouldn't factor in to it. As long as my price per RVU falls into a certain category than I should be fine even if total compensation is >90th percentile nationally due to individual production. Local admin saying different. .. my 80% RVU can be justified by being a single hospital in a very rural small town with a difficult to recruit specialty.

    Anyone familiar with such a scenario?

  • #2
    So they're going to just cut your reimbursement not your partners?  You don't have a group contract?

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    • #3
      Your admin friend is right. Fair Market Value only plays a role if there is a disconnect between your production and your pay, i.e. if your wRVU productivity is 30th percentile but pay is 99th percentile. A 100% production compensation model should never result in a Stark/Antikickback Statute violation unless the pay per wRVU is out of line. The optimist says your local admin is misinformed, the cynic says a 40% paycut means they didn't budget for you to work hard. It sounds like you have a good amount of leverage in this scenario (rural, hard to recruit specialty, high earner) to stand your ground.

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      • #4
        Agree with pulmdoc sounds like theyre just trying to screw you but you hopefully have leverage..

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        • #5
          They're definitely trying to screw the high production/earners, which includes myself and one other.

          It is still a "group" contract but they want to just base everyone at 85% with 15% at risk money mostly on "value" metrics. Income will be the same with additional security for the others, so I bet they bite.

          It will be absolute program suicide to get rid of the production incentive but they're sure trying to go down that route. I do have decent leverage but as WCI indicates that always means you got to be willing to walk and I am.

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          • #6
            Agree with everyone this sounds crazy. They simply want a larger cut. You could say how about I work less?

            Given your leverage and being on the right side of things, I would hold my ground pretty strongly. You should get something for being willing to do the work. Keep us updated.

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            • #7
              If you ever do need to get a second opinion feel free to reach our FMV experts for consultation.  www.healthcareappraisers.com

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